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CFPB Director Gives Update on Credit Reporting Industry

The director of the Consumer Financial Protection Bureau or CFPB, Richard Cordray, recently gave an update on the Bureau’s work on making changes to the credit reporting industry. Here are some of his comments which I think are noteworthy for Arizona consumers:
“Every consumer who seeks to make use of credit to help manage his or her financial affairs is affected by this industry, whether they are aware of it or not.”
“People’s ability to access credit, and how much they pay for credit, is typically governed by what is contained in their credit profiles.”
“[C]redit reports and credit scores can determine the terms of people’s mortgages, whether they qualify for auto loans, or if they are eligible for different credit cards. These effects on people’s lives are obviously very significant.”
“[C]redit reports, and the scores derived from them, have come to play an even more fundamental role in determining whether and how each of us will be able to take advantage of opportunities to shape our futures.”
“Last year, we launched an initiative to encourage credit card companies to make credit scoring information more easily and regularly available to credit card customers at no cost . . . Now, more than a dozen issuers are providing scores directly and freely to consumers on a regular basis... .”
“[T]he Consumer Bureau has begun to exercise direct oversight over the larger credit reporting companies, including the three nationwide credit reporting companies. We also supervise the larger creditors and some of the other businesses (such as debt collectors) that furnish information on their customers’ accounts to populate credit reports.” 
“Using our supervision and enforcement authorities, we are already bringing significant new improvements to the credit reporting system - and we are only getting started. Credit reporting companies are now making investments to ensure that they are more closely following the law . . . We are also working to ensure that the credit reporting companies are focused on how well the furnishers are meeting their obligations to report information that is accurate and to properly investigate potential errors.”
“In December, we announced that we would be requiring the largest credit reporting companies to provide us with regular, standardized accuracy reports . . . These reports will specify the number of times consumers dispute information on their credit reports during that period. It will also list furnishers with the most disputes, industries with the most disputes, and furnishers with particularly high dispute rates relative to their peers.”
“We have focused on the reporting of medical debt in collections because of concerns that some reported information may not be a true reflection of a consumer’s creditworthiness. From one medical incident – a single trip to the hospital or a period of treatment for an illness – there can be multiple bills from multiple providers, which may or may not be covered by insurance. As a result, consumers might not know which medical debts they are responsible for paying or in what amounts. As a result of a recent Bureau study, credit scoring models are being re-evaluated and adjusted to avoid overly penalizing consumers for medical debts.”
“We found that consumers who reported high levels of financial well-being defined it as having financial security and financial freedom of choice, both in the present and in the future. Consumers certainly will feel greater assurance about their financial well-being as they can more readily access their credit reports and credit scores and feel more confident that they can get errors fixed to ensure the reliability of their credit profiles. That is part of our vision for the credit reporting industry.”
To read the full update go here.  


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